Effect of Crypto Indexes on Crypto Currencies: Relationship between HODL Index and Bitcoin

Abstract

Crypto Indexes are spreading and increasing in numbers recently. HODL is an index reflecting 75% of changes in the crypto market. Investors who aim to have exposure to crypto market may invest in these indexes. Volume of the HODL is found to be statistically significant on HODL return. İt shows that volume triggers demand for this Index. VIX and volume of HODL are both found to have a negative effect (95%) and (90%), respectively on BTC returns. VIX is found to have a positive effect (95%) but HODL volume has a negative effect (95%) on BTC Volume. This study also aims to discuss crypto currency investment rationale and the risks embedded in these investments. The future of tokens and coins is addressed with the related literature. Crypto currencies as an asset class may be an alternative for investors; the robustness of such an option is challanged in this study.